Kehoe v. WILDMAN, HARROLD, ALLEN AND DIXON

899 N.E.2d 1177, 387 Ill. App. 3d 454
CourtAppellate Court of Illinois
DecidedDecember 15, 2008
Docket1-07-0435
StatusPublished
Cited by12 cases

This text of 899 N.E.2d 1177 (Kehoe v. WILDMAN, HARROLD, ALLEN AND DIXON) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kehoe v. WILDMAN, HARROLD, ALLEN AND DIXON, 899 N.E.2d 1177, 387 Ill. App. 3d 454 (Ill. Ct. App. 2008).

Opinion

JUSTICE GARCIA

delivered the opinion of the court:

This appeal arises from Robert E. Kehoe, Jr.’s suit against his former law firm, Wildman, Harrold, Allen & Dixon (the Firm), and six of his former law partners, Richard C. Bartelt, Michael R. Dockterman, John L. Eisel, David J. Fischer, Michael L. McCluggage and Robert L. Shuftan, for alleged breach of the partnership agreement and alleged breach of their fiduciary duty to the plaintiff arising from a vote to change the plaintiffs status from equity to nonequity partner.

The jury returned its verdict for the plaintiff. The jury found the Firm and four of the six partner defendants breached the partnership agreement and the four partner defendants breached their fiduciary duty to the plaintiff. The jury found in favor of Bartelt on both claims. The jury found in favor of Eisel on the breach of contract claim, but made contradictory findings as to the breach of fiduciary duty claim. The jury answered the “Jury Question on Plaintiffs Claim for Breach of Fiduciary Duty” that the plaintiff did not prove the elements of his claim for breach of fiduciary duty against Eisel. But the jury returned a verdict against Eisel on the fiduciary duty verdict form. The trial court, treating the “Jury Question” as a special interrogatory, entered judgment in favor of Eisel. The trial court entered judgment on the jury’s verdict against the Firm and the same four partner defendants the jury found liable on the two claims.

Posttrial motions were filed by both sides. The trial court denied the posttrial motions filed by the Firm and the four partner defendants. On the plaintiffs posttrial motion, the trial court reversed itself on the fiduciary duty claim as to Eisel:

“[The] jury question did not act as a special interrogatory, and therefore judgment should not have been entered based on the jury’s negative answer to the question of whether Plaintiff proved the elements of his claim of breach of fiduciary duty against Defendant John L. Eisel but should have, instead, been entered based on the jury verdict, which found in favor of Plaintiff.”

The trial court, however, denied the plaintiffs motion that he receive prejudgment interest.

The Firm and the partner defendants contend the trial court erred in denying their motion for judgment notwithstanding the verdict as to the breach of contract claim because changing the plaintiffs status from an equity to nonequity partner was not the equivalent of an involuntary withdrawal under the partnership agreement. The four partner defendants contend the manifest weight of the evidence does not support a finding that a breach occurred on the contract action. The partner defendants, including defendant Eisel, contend the manifest weight of the evidence does not support a finding that a breach occurred on the fiduciary duty count. Regarding the breach of fiduciary duty count, the partner defendants contend the plaintiff failed to establish that the votes taken by the partner defendants proximately caused injury to the plaintiff. Defendant John Eisel contends the trial court erred in reconsidering its initial judgment entered in his favor. The partner defendants contend the trial court committed reversible errors on the fiduciary duty count in refusing their proposed jury instructions and allowing irrelevant and prejudicial evidence concerning the separation of partners in 1994. Finally, the Firm and partner defendants contend the trial court erred in awarding the plaintiff costs for trial transcripts.

On cross-appeal, the plaintiff contends he is entitled to interest under the Interest Act (815 ILCS 205/2 (West 2006)) because the damages he was awarded are liquidated damages. The plaintiff argues the trial court erred in finding he was procedurally barred from receiving interest under the Act because he did not file his motion before judgment was entered.

For the reasons that follow, on the defendants’ appeal, we affirm the judgment of the circuit court only as to the judgment entered against the Firm. On the plaintiff’s cross-appeal, we reverse the court’s order denying the plaintiffs motion for prejudgment interest.

BACKGROUND

The defendant Wildman, Harrold, Allen & Dixon is a Chicago law firm. The plaintiff became an equity partner of the Firm in 1979.

At trial, the plaintiff introduced evidence that in 1994, the Firm’s management committee conducted a review of the productivity of the Firm’s partners. Following the review, 10 partners were identified and offered separation packages. The partners resigned and received payments pursuant to negotiated separation agreements. Most of the agreements provided the partners with the article VII benefits normally paid to an involuntarily withdrawn partner according to the 1991 partnership agreement. During the 1994 review, the plaintiffs productivity was discussed, but he remained an equity partner.

In 1995, the Firm met with several banks to negotiate restructuring its financing. In November 1995, the partnership approved a loan agreement with American National Bank (ANB). Partner defendant Fischer negotiated the loan agreement. The original ANB loan agreement required each equity partner to execute a personal guaranty “in a form acceptable to the bank.” By February 1996, every partner, except the plaintiff, had executed an acceptable personal guaranty. The plaintiff expressed objections to some of the provisions of the guaranty. The plaintiff testified he informed Eisel that he would sign a guaranty if his concerns were met. The plaintiff further testified he offered to draft papers that would eliminate his objections, but Fischer refused him access to the file. The loan closed without a personal guaranty from the plaintiff.

Later, the Firm negotiated with ANB to eliminate or modify some, but not all, of the provisions the plaintiff objected to. An amendment to the loan agreement was made in July 1996 (the amendment). The amendment further defined the individual partners’ obligations should ANB seek to enforce the guaranty. The plaintiff testified the amendment eliminated the requirement that every partner provide a guaranty, but specifically noted that any partner not providing a guaranty would be exposed to personal liability for the full amount of the debt.

ANB never approached the plaintiff about his failure to execute a guaranty. At trial, Eisel admitted ANB allowed the Firm to use the line of credit even though the plaintiff had not signed a personal guaranty.

In November 1996, Eisel informed the plaintiff ANB wanted personal guaranties. However, the plaintiff believed the amendment removed that requirement. The plaintiff testified no one approached him regarding his failure to sign a personal guaranty between July 1996, when the amendment was executed, and November 1996.

On November 25, 1996, the management committee held a meeting and proposed a resolution to the partnership that allowed the partnership to change any equity partner’s status to a nonequity partner should he or she fail to execute a personal guaranty for the ANB loan.

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Bluebook (online)
899 N.E.2d 1177, 387 Ill. App. 3d 454, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kehoe-v-wildman-harrold-allen-and-dixon-illappct-2008.